Sourcing

Pallinghurst Gets Go-Ahead in its Bid for Gemfields

SourcingJun 27, 2017

Pallinghurst Gets Go-Ahead in its Bid for Gemfields

Pallinghurst Resources Ltd. announced Monday that it has received the shareholder support needed to move ahead with its bid to fully acquire Gemfields.

2017_Gemfields-Kagem_copy.jpg
Gemfields operates the Kagem emerald mine in Zambia, pictured here. The company’s biggest investor, Pallinghurst Resources, has received shareholder approval to move ahead with its takeover bid.

London--Pallinghurst Resources Ltd. announced Monday that it has received the shareholder support needed to move ahead with its bid to fully acquire Gemfields. 

Despite suggestions from Gemfields’ board last week that it might have trouble gaining the necessary support, Pallinghurst received 96 percent of the vote.

The news is just the latest in the bidding war that has been surrounding the London-based colored gemstone miner of late.

In May, Pallinghurst, the company’s biggest investor, made an unsolicited offer to buy the 53 percent of Gemfields it doesn’t already own. Under the terms of the deal, each Gemfields shareholder will be entitled to receive 1.91 Pallinghurst shares for each Gemfields share.

Just a few weeks later, Shanghai-based investment company Fosun Gold offered to pay about $286 million for the company, a “significant premium to the Pallinghurst offer,” Gemfields said. 

Gemfields’ board has said from the start that the Pallinghurst offer “significantly undervalues” the company, advising that the Fosun Gold offer is better. The board’s independent committee reiterated that thought in a statement published online Monday, stating that it believes Pallinghurst’s offer “denies Gemfields shareholders the ability to realize the material future upside potential of the company on a standalone basis.”

The company declined to comment beyond its statement posted online.

But since Pallinghurst already had received approval from the majority of Gemfields shareholders (including its own shares) and, now, gotten approval from its own shareholders, it has declared its offer for Gemfields to be wholly unconditional.

As of the end of the day Monday, Pallinghurst said in a statment, it had received the acceptances of more than 75 percent of shareholders (the necessary threshold), securing its control of the company and allowing it to de-list Gemfields from the AIM market of the London Stock Exchange once the offer expired July 4. 

Concurrent with Monday’s announcement from Pallinghurst, Fosun Gold’s cash offer for Gemfields lapsed.

In other company news, Gemfields also held an auction of rough ruby from the Montepuez mine in Mozambique this month and saw record auction revenues.

At the Singapore sale, which offered high- and commercial-grade rough rubies in both untreated and treated form, revenues reached a high for Gemfields of $54.8 million.

The auction was 85 percent sold by weight but 98 percent sold by market value, with an average per-carat price of $61.13.

The ruby sale was the second ruby and final auction of this

fiscal year for Gemfields. Total revenues from all rough gemstone auctions year-to-date is about $132.7 million.
Brecken Branstratoris the senior editor, gemstones at National Jeweler, covering sourcing, pricing and other developments in the colored stone sector.

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